The morning before this interview, Pravin Thakur, CFP, Ed. D., spoke with three advisors in South Africa, all of them much younger than the 21-year MDRT member from Kwazulu Natal, South Africa, and all interested in obtaining their CFP designation as soon as possible.

That encounter brings Thakur back some 25 years or so, when a career in financial services wasn’t even regarded as a profession in South Africa, and many advisors were reluctant to study for a designation because that meant time away from writing business. It was a period when Thakur, a teacher who became an advisor in his late 30s, nearly quit because he felt uncomfortable with the approach that valued selling a product over understanding clients and recommending what works best for them. “When I trained as a teacher, I studied for four years,” said Thakur, who is now semi-retired but still handles risk, retirement and more for 350 clients and employs two administrative staffers. “When I first got into financial services, there was a three-week training program and you’re on the road.”

Now, he says, 4,600, or 8% of the 60,000 advisors in South Africa, are CFPs, up considerably from when Thakur began.

How it started

Perhaps you work in a country where financial planning has been widely embraced for as long as you can remember. Thakur explains that it wasn’t until the Financial Advisory and Intermediary Services Act, introduced in 2002 and signed into law in 2004, that South Africa experienced the beginning of a financial planning revolution that is still coming of age nearly two decades later.

Beforehand, advisors were driven by activity and sales — connecting an individual’s emotions with products that corresponded to those feelings about risk. After the legislation, Thakur said, financial planning was respected as a profession that followed a scientific method in which a relationship was established, information (including legal, financial, biographical, behavioral and psychological) was gathered and analyzed, recommendations were made, and a plan was implemented and then regularly reviewed.

That approach might seem basic, and after a change, it’s easy to forget that things weren’t always like this. Thakur recalled doing a full needs analysis for a client in 2005. The client was amazed not only with receiving a comprehensive plan but also by the technology that developed it. added, asking how a client feels might be the emotional entry point of the conversation, but the science and analysis of how to establish, monitor, and achieve goals is critically quantitative rather than qualitative.

How it’s changed

As financial planning has evolved to emphasize science and a holistic perspective of client needs, Thakur has seen several trends emerge in South Africa:

• Selectivity. Where previously many entered the profession by default and sometimes lacked passion or purpose, now more people are entering by choice, he said.
• Diversity. For reasons both political and otherwise, financial advisors previously were often white, male and older than 50. Now advisors are more likely to be in their 30s and female. Thakur notes that women often look at finances differently than male advisors.
• Professionalism. As mentioned above, the impulse toward qualifications has greatly changed, with more advisors favoring education and science as companies seek to work with people who are more established.

Of course, not everything has changed. More awareness about science (particularly regarding investments) occurred after the financial crash of 2008, said Thakur. Now he estimates that 40% of his clientele still favors a simplistic financial planning approach (about taxes or savings, for example) rather than a holistic one based on science. Full needs analysis sometimes gets pushed to next year, then the year after. Out of 350 clients, he estimates that 20 to 30 take the initiative to schedule an annual review on their own, a total he’d love to see increase.

How to educate

Thakur recommends sharing case studies via newsletters and/or social media to demonstrate what happens when a client connects their wishes and concerns to the scientific process and the solution that results — as well as what happens when an incident occurs and the client doesn’t have a solution in place.

Thakur understands that much of the world may be ahead of South Africa in embracing these ideas. Working as a university lecturer in financial planning, he is heartened to see a change in his own country.

Five years ago, he had just eight students in class, with an average age in their 40s. In 2021, Thakur had 35 students, evenly divided between women and men, with an average age in the 20s.

“If people enter the profession later and already have kids, they need income as soon as possible, and adding education might not be a priority,” he said. “That trend is changing, and for the better.”

Contact: Pravin Thakur pravin.thakur@liblink.co.za